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3 years ago

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

Business

1 answer:

Dahasolnce [82]3 years ago

5 0

Answer:

Product D

Explanation:

Calculation to determine Which product makes the MOST profitable use of the grinding machines

First step is to calculate the Variable cost per unit

Products

A B C D

Direct materials $16.10 $20.00 $13.00 $15.70

Add Direct labor 18.10 21.50 15.90 9.90

Add Variable manufacturing overhead 4.90 6.10 8.60 5.60

Add Variable selling cost per unit $3.10 $3.60 $3.30 $4.00

Variable cost per unit $42.20 $51.60 $40.80 $35.20

Now let calculate the product that makes the MOST profitable use of the grinding machines

Selling price per unit $81.20 $73.60 $70.40 $65.10

Less Variable cost per unit $42.20 $51.60 $40.80 $35.20

=Contribution margin per unit $39 $22 $29.60 $29.90

÷Grinding minutes per unit 2.25 1.35 0.95 0.55

=Contribution per grinding minutes $17.33 $16.30 $31.16 $54.36

Therefore Based on the above calculation the product that makes the MOST profitable use of the grinding machines is PRODUCT D because it has the highest Contribution per grinding minutes of the amount of $54.36

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